Fast and easy access to real-time business intelligence is critical to meeting demands and keeping pace with change. Download this complimentary white paper to learn why manufacturers are embracing mobile technology to stay competitive -- and what you should know before you invest.

During this Webcast you'll learn how the latest generation of robotics systems, which incorporate vision, mobility, autonomous navigation, complex manipulation and motion control, can be used in a wide variety of appliations such as picking, placing, order fulfillment, palletizing, depalletizing, loading, unloading and many other areas.

In another sign that America is becoming more competitive in manufacturing, the U.S. is now equal to Mexico in “attractiveness” as a source for manufacturing operations and is on track to achieve cost parity with manufactured imports from China by 2015. These are among the findings from new research released by AlixPartners, a global business consulting firm.

According to the survey, 37% of manufacturing executives said they would choose the U.S. as their preferred location for nearshoring. An equal percentage of respondents cited Mexico as the most attractive nearshoring locale, but in the firm’s survey just two years ago, 63% chose Mexico, while only 19% said they would choose the U.S.

Foster Finley is managing director at AlixPartners and director of its Supply Chain Practice. In a recent interview, Finley spoke with Modern about the research and what it says about nearshoring and reshoring efforts among global manufacturers. He stressed the report’s statements on the attractiveness of various regions for the production of U.S.-bound goods is a projection – not a prediction – based on straight-line extrapolations from 2013 trends.

“If the United States reaches parity with China in 2015, that would be more about luck than any statistical certainty,” said Finley. “A lot could happen in the next few years.”

The cost gap with China has on average been closed by approximately 70% for the products AlixPartners analyzed. If current trends remain in place, on average, by 2015 the cost of importing manufactured products from China will be about the same as manufacturing them in the U.S, said Finley. However, other key low-cost countries, such as Mexico and India, will remain highly competitive.

With a resounding 84% of the C-level executives saying that the decision to nearshore their manufacturing would be an important one during the next year (versus just 53% who said the same last year), it is clear that nearshoring and reshoring decisions are moving to the front burner in 2013. Approximately 58% of the respondents said for production that has either already been nearshored or is being considered for nearshoring, they have either reduced or expect to reduce their total “landed cost” by 5% to 20%.

The third annual survey captures the sentiments of executives, but AlixPartners has also been tracking the raw macroeconomic data in seven key factors related to global manufacturing costs. They are:

Generally, the raw numbers line up very well with the sentiments expressed by survey respondents, but Finley was careful to note that there are no direct lines between any one of these costs in a given country and the advantage of manufacturing there.

“Some of the less sophisticated companies are almost entirely focused on labor,” he said. “Depending on the product or mix of products made in a facility, labor could be inconsequential. It’s about an analysis of the products, not the facility, that will make the justification for relocation.”

For example, while the “China cost” for items analyzed such as machined aluminum parts, plastic molded parts, non-denim slacks, and knit apparel and sweaters is indeed on the rise, that cost is still lower than Mexico’s in each case – and is forecast to remain lower through at least 2015.

The one-time costs associated with a move are also critical to such a decision. Tax incentives, utility incentives and other governmental programs might help ease the transition to the U.S. or ensure a company doesn’t leave, but the U.S. is not alone in considering and implementing such incentives. “We think China will get into that as well, as they realize they need to get competitive to grow manufacturing or keep it in China,” said Finley. “China has its work cut out for it, because it has to deal with an export-based economy with a rising wage rate and a small consumer market.”

Automation will continue to play a big role as manufacturing welcomes what Finley called the “democratization of robotics.” In the list of economic factors above, automation seeks to transfer labor costs to overhead, which improves predictability. As the costs for automated technologies fall to the point where more small manufacturers can afford them, it increasingly places control of the labor costs in their hands.

About the Author

Josh BondAssociate Editor

Josh Bond is an associate editor to Modern. Josh was formerly Modern’s lift truck columnist and contributing editor, has a degree in Journalism from Keene State College and has studied business management at Franklin Pierce.

Subscribe to Modern Materials Handling magazine

Subscribe today. It's FREE!

Find out what the world’s most innovative companies are doing to improve productivity in their plants and distribution centers.

Your ProMat 2015 registration not only gives you access to the 325,000 square feet of exhibits, educational sessions and keynotes in McCormick Place South, it also grants you access to Automate 2015 located directly across the Grand Concourse hallway in McCormick Place North.

Article Topics

About the Author

Josh Bond is an associate editor to Modern. Josh was formerly Modern’s lift truck columnist and contributing editor, has a degree in Journalism from Keene State College and has studied business management at Franklin Pierce. Contact Josh Bond